Ukraine’s president voiced irritation at the European Union over its push to get his country sign a trade deal, calling the pressure ‘humiliating’. Kiev postponed the move citing vulnerability of its economy and triggering massive pro-EU protests.

Ukraine was expected to sign the association agreement with the
EU at a summit in Lithuania later this week, but made a U-turn
last Thursday. The country’s economy is far too vulnerable at the
moment to be opening up to Europe, President Viktor Yanukovich
tried to explain on Tuesday in an interview to major Ukrainian TV
channels.

At the same time the measures that Brussels offered to cushion
the blow remain elusive and insufficient, he said.

“I am convinced that we should not be begging from poor
relatives anywhere. I don’t want to allow and will not allow
Ukraine to be humiliated, as long as I lead this country,”
Yanukovich said.

He mentioned Kiev’s failed negotiations with the International
Monetary Fund (IMF) to secure a credit line in exchange for
policy adjustments, which the EU said would enable it to offer a
610 million euro ($830 million) aid package. A deal with the IMF
would include freezing of pensions and salaries, rising of gas
tariffs and other measures, which would hurt Ukrainians, the
president said.

“They’ve been teasing us with this candy in a bright wrapping
for three years, telling us we would get it as soon as we sight
the IMF deal,” Yanukovich said in a reference to the EU aid.
“Don’t humiliate us. We are not kids; we don’t fall for
sweets. We are a serious European country.”

Costly overhaul

He reiterated that his government wishes to establish closer ties
with the EU, but wants to do it on its own terms at the right
moment.

“We will do everything to make Ukraine tougher in terms of
economy. Once we are at a comfortable level, we will sight the
agreement with the EU,” he pledged. “Time will tell when
this happens.”

A similar sentiment was voiced on Wednesday by Ukraine’s Prime
Minister Nikolay Azarov, who said that the country “cannot
sacrifice its economic sovereignty and cannot allow that the
association agreement turned out to be a failure for both Ukraine
and the EU.”

Among other things, the association agreement requires that
Ukraine overhaul its standards system, harmonizing it with that
of the EU. Some 20,000 standards encompassing everything from the
size of the bolts for road signs to the railroad gauge would have
to be updated. The modernization of the economy would cost $160
billion up to 2017, with $20 billion or more each year spent just
for the standards upgrade, according to Yanukovich.

A country with a $136 billion debt and a slowdown in the economy,
Ukraine may find it difficult to afford such an ambitious
undertaking. So Kiev would have to seek foreign aid to fund it,
and Europeans, having a vested interest in the integration, are
the likely candidates to open their pockets.

But Europe itself is currently not in its best economic shape. EU
members in the south are convulsing from protests as cabinets in
Greece, Portugal, Spain and Italy slash their budget spending and
try to deal with record-high unemployment.

Union-wide, 125.3 million people were living at the risk of
poverty or social exclusion in 2012, according to Eurostat, which
is an increase of 7 million from 2010. The idea of footing the
modernization bill for would-be member Ukraine may not be welcomed by European voters.

Street politics and alternative delegations

Last week’s decision angered many Ukrainians, who anticipated
that the country would step on a fast track to eventual
membership in the union with all the associated benefits. Thousands of people took to
major squares in Kiev in a protest against the stalled European
integration.

On Tuesday night the two protest camps located in the European
Square and the Independence Square decided to merge.

President Yanukovich said he applauds the opposition protesters,
even though he does not share their drive for an immediate
European integration.

The protests so far were mostly peaceful, although on several
occasions groups of aggressive demonstrators armed with pepper
spray clashed with riot police, who responded with tear gas and
batons.

Police on Tuesday warned the demonstrators against siding with
some calls on the internet, which advocate storming the cabinet
building on Wednesday and overthrowing the government.

Some Ukrainian opposition leaders said they plan to visit the EU
summit, forming a delegation independent from that headed by the
president. While the leader would be busy explaining his
government’s decision to postpone integration, the alternative
delegation would “represent the position of the Ukrainian
people, not Yanukovich” an opposition MP told a protest
rally.

Depoliticizing the conflict

In the past few days several European officials blame Russia over
the Ukrainian U-turn. Officials in EU accused Russia of using the
threat of stripping trade preferences as leverage on Kiev.

There is also a controversial gas deal Moscow and Kiev signed
back under the previous Ukrainian administration, which the
Yanukovich government considers extremely unfavorable towards
Ukraine. The terms of the gas deal remain a major bargaining chip
for Russia.

One of the latest remarks came on Tuesday from former Polish
President Aleksander Kwasniewski, who co-leads a European
Parliament monitoring mission in Ukraine.

“For a long time we believed that Ukraine’s determination is
strong and that they would not allow a different point of view to
be imposed. The change came in summer 2013. The talks became less
sincere; there was this feeling of something happening behind the
stage. Europe underestimated the Russian factor,” Kwasniewski
told TVN24 television.

"The EU would be wise to analyze the situation and find
instruments, which would be convincing for Ukrainians,” he
added.

The string of accusations was rebuffed by Russian President
Vladimir Putin.

“I would ask our friends in Brussels to refrain from harsh
statements. Do they want us to delete an entire sector of our
economy just to please them?” he said.

The Russian leader dismissed the allegations that Russia’s
position is motivated by anything other than legitimate concerns
about its own business interests.

“If Ukraine signs the free trade agreement with the EU, it
takes upon itself an obligation to drop import tariffs by 85
percent two months after ratification of the treaty and further
drop them over three years. This means that if we keep our free
trade zone with Ukraine, we would certainly see European goods
enter our market through Ukraine,” Putin explained. “This
poses a big threat to our economy.”

Putin called on the Europeans to depoliticize the entire
situation and reiterated Moscow’s proposition for trilateral
negotiations between Ukraine, Russia and the EU to settle
differences on the integration effort. The idea is viewed
favorably in Kiev, but Brussels remains skeptical and would
prefer to deal with Ukraine and Russia in a bilateral format.